To get a jump on where the stock market may be headed, track the stock futures and premarket prices, particularly the index futures. Outside of normal market hours, the Dow futures, S&P futures and Nasdaq futures can help you build your Investing Action Plan for when the stock market opens.
The prices of the futures for indexes and individual stocks are based on after-hours or premarket trading. The prices you see in the index futures market do not necessarily indicate where the index or stock will open in the next trading session.
Use the Dow futures, S&P futures and Nasdaq futures to get a feel for where the market may be headed, not for exact predictions of pricing.
Bookmark this page to stay on top of index futures. You’ll also find information on individual stocks moving in extended-hours trading.
Latest Stock Futures And Premarket News
What Are Stock Futures And Premarket Trading?
Index futures are derivatives of indexes such as the Dow Jones industrial average, S&P 500 and Nasdaq 100. Investing in these futures is essentially betting on the future value of the index. Like options, futures contracts always have an expiration date.
Institutional investors, particularly, use index futures to lock in a future buy or sell price. The trade is based on where they think the market is headed or to hedge their positions against different scenarios.
In addition to stock futures based on the Dow Jones industrial average, S&P 500 and Nasdaq 100, stock futures for the Russell 2000 are also widely used.
Fund managers and other large investors often use futures because they are leveraged. In other words, using a form of margin, investors can control shares in the index or stock without having to pay full price up front.
But understand that trading index futures is complicated since are highly leveraged investments. Investors who don’t understand how to manage leverage and the related risk should refrain from trading futures. Be sure to first understand both the benefits and potential pitfalls before investing.
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